Problems relating to Trade and Investment on Hungary

14. Taxation Systems
Issue	Issue details	Requests	Reference

(1) High VAT Rate and Prolonged Term of VAT Refund Procedures	- While VAT rate is high at 27%, its refund system is undependable. Sometimes, it takes more than 6-months to get the VAT refunded. - Effective 1 January 2012, VAT rate becomes 27%.	- It is requested that GOH: -- gets the VAT refunded within 2-months maximum, and -- enhances the reliability of the refund system. - It is requested that Government of Hungary (GOH) cuts down the VAT rate to the level of the other EU Member States.
	(Info) - Value Added Tax(VAT): Standard Rate is 27%, while reduced rates of 18% and 5% apply to some items: -- 18% on milk, dairy products, foods using grains, wheat, etc, commercial boarding accommodation, etc. -- 5% on medicines, books, central heating, etc.

(2) Frequent Changes in Taxation System

- Government of Hungary (GOH) introduces new taxes such as tax on financial transactions (0.6%), VAT (27%), as if being swung to and fro by the national budget. Enterprises are unable to secure the budgeted profits on their operations.
- New tax scheme rules frequently enacted have become a factor, impacting enterprises' profitability.

- Upon introduction of new taxation system or effectuation of new laws and regulations, it is requested that GOH takes steps to:
-- provide opportunities for exchange of dialogues with FFEs, and
-- secure foreign funded enterprises (FFEs) opportunities for exchange of dialogues and provide adequate and sufficiently appropriate explanation.
- It is requested that GOH endeavours to stabilise its taxation scheme.

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